Exhibit 12-1
Ellie Inc.has the following cash flows to account for:
(1)Cash receipts from the sale of long-term bonds.
(2)Cash receipts from the sale of equipment.
(3)Cash payments for income taxes.
(4)Cash receipts from the sale of stock.
(5)Cash payments for the purchase of a factory building.
-Refer to Exhibit 12-1.Which of these items would appear in the financing activities

Question

Quizplus · Accepted Answer

Financing activities typically involve obtaining funds from investors or repaying investors. Cash receipts from the sale of long-term bonds (item 1) and cash receipts from the sale of stock (item 4) fall under this category as they represent funds obtained from investors. Cash receipts from the sale of equipment (item 2) and cash payments for the purchase of a factory building (item 5) are typically considered investing activities as they involve the acquisition or disposal of long-term assets. Cash payments for income taxes (item 3) are considered operating activities as they are a result of the day-to-day operations of the business.

Exhibit 12-1 Ellie Inc.has the Following Cash Flows to Account For